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EMS Cost-Benefit Analysis:
You would like to start a program to target your “frequent fliers” in order to reduce unnecessary EMS calls
Program start-up costs in year-0 are $200,000 (the program will not start until year-1)
In year-1, you enroll 25 patients and expect to avoid 5 calls per patient over the course of the year (each averted call saves $900)
Costs in year-1 are $80,000
In year-2, you expect to enroll an additional 15 patients with similar results
Costs for year-2 increase to $125,000
Costs and savings are predicted to remain constant through year-5
At the end of year-5, what is the sum net benefit with a 5% discount rate?
Please show your work!
Would this program be approved at a 5% discount rate? At which discount rate might the approval answer change?
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